White Stallion files bankruptcy with plans to sell assets by January

By Sarah Lizee

Olympia, Wash., Dec. 3 – White Stallion Energy, LLC filed Chapter 11 bankruptcy on Wednesday in the U.S. Bankruptcy Court for the District of Delaware.

“The debtors entered Chapter 11 facing a severe, unexpected cash shortage brought on by, among other things, a steep decline in the broader coal market, which was exacerbated by the outbreak of the novel coronavirus pandemic, and outsized debt obligations that hindered the debtors’ ability to perform in an industry that typically requires substantial capital expenditures to maintain equipment and operations,” David J. Beckman, chief operating officer of the company, said in a declaration.

Beckman said that due to the severe lack of liquidity, the debtors were forced to terminate all of their employees just prior to the petition date and to idle their mining operations during the pendency of the Chapter 11 cases.

White Stallion intends to rehire up to 24 employees to support the company through bankruptcy and provide ongoing coal deliveries to the company’s largest key customer.

The company has filed several first-day motions to limit operational disruption.

DIP financing

The company has engaged in negotiation with its pre-bankruptcy term loan lenders, who’ve agreed to provide the debtors with debtor-in-possession financing to fund the company through bankruptcy and toward a sale of the company’s assets expected to close in January.

The debtors are seeking court approval of an up to up to $12.61 million super-priority senior secured DIP delayed-draw term loan credit facility, composed of a dollar-for-dollar roll up of $8.61 million of outstanding loans under the existing term loan and $4 million of new term loans.

Riverstone Credit Management LLC is the administrative agent.

The facility will mature on Jan. 15.

DIP loans will bear interest at 12%. There is a 2% exit fee.

The company is also seeking court approval to access the cash collateral of its pre-bankruptcy lenders.

Debt details

The debtors’ pre-petition capital structure includes a $90 million term loan facility due October 2021 that bears interest at Libor plus 1,150 basis points, a $7.1 million asset-based facility due October 2021 that bears interest at a variable rate and a $2 million real estate purchase agreement due November 2024 that bears interest at 5%.

Riverstone is the administrative agent on the term loan facility. KeyBank NA is the administrative agent on the ABL.

The company listed $100 million to $500 million of both debt and liabilities in its petition.

White Stallion’s largest unsecured creditors are MacAllister Machinery Co., Inc., based in Detroit, with a $10.44 million trade claim; Old National Bank, based in Evansville, Ind., with a $10.06 million bank loan claim; Synenergy Partners LLC, based in Vernon, Mont., with a $6.83 million trade claim; Warex, based in Boonwille, Ind., with a $4.24 million trade claim; Caterpillar Financial Services Corp., based in Dallas, with a $1.85 million trade claim; and Whayne Supply Co., based in Louisville, Ky., with a $1.62 million trade claim.

The company’s counsel is Paul Hastings LLP and Young Conaway Stargatt & Taylor, LLP.

White Stallion Energy is a coal mining company based in Evansville, Ind. The Chapter 11 case number is 20-13037.

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